Audit 32609

Finding 2022-001 Subject: Coronavirus Relief Fund ? Chicago Connected Subrecipient Monitoring Federal Agency: United States Department of the Treasury Federal Program: Chicago Connected ? Coronavirus Relief Fund Assistance Listing Number: 21.019 Pass-Through Entity: City of Chicago Compliance Requirements: Subrecipient Monitoring Audit Findings: Material Noncompliance, Material Weakness Criteria In accordance with 2 CFR section 200.332 related to requirements for pass-through entities, all passthrough entities must address the following relative to information provided to subrecipients: ? Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes detailed federal award identification information as described in 2 CFR section 200.332(a)(1) ? All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award ? Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports ? A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and ? Appropriate terms and conditions concerning closeout of the subaward. Additionally, 2 CFR section 200.332 requires the following monitoring activities: ? Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include ? Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. ? Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records Condition CFF did not communicate the required information to subrecipients noted in the criteria including the communication of what funding represented federal funding and was subject to the related grant requirements. Additionally, while CFF in conjunction with program partners monitored the activities of the sub-grantees, the extent and results of this monitoring was not formally documented. Finally, CFF did not formally monitor audit results for the sub-grantees. Cause CFF has not historically received federal grant funding. As a result, management was not familiar with certain administrative requirements related to program oversight. Effect or potential effect Without information regarding the federal nature of certain pass-through funding, sub-grantees may broadly fail to comply with applicable federal requirements. Furthermore, this could impact CFF?s ability to properly oversee sub-grantees and take necessary corrective action, if applicable. Questioned cost None Context As part of testing this major program, requests were made to review agreements with sub-grantees and inquiries were made of CFF management relative to important requirements in 2 CFR section 200.332 and corresponding actions taken by CFF. These audit procedures identified that these key activities were not conducted. The entire amount of federal expenditures for the year ($915,830) were passed through to subrecipients. This finding is applicable for each subrecipient relationship. Identification as a repeat finding This is not a repeat finding. Recommendation We recommend that in the future CFF take the necessary steps to adhere to the requirements in 2 CFR section 200.332 relative to the monitoring of subrecipients. View of responsible officials The Chicago Connected initiative was supported by various external partners, including government and philanthropic funders. As the fiscal sponsor, the Children First Fund executed service agreements with each participating community-based organization (CBO), that noted the amount they were awarded. As deliverables were met, CFF made payments based on when the funds came in since they were not designated to a particular CBO by funder. As a result, CFF did not notify CBOs which payments came from federal vs philanthropic funding. Understanding that this is required when it comes to distributing federal funds to subrecipients, CFF will ensure that it's internal controls are updated to include this moving forward.

Finding 2022-001 Subject: Coronavirus Relief Fund ? Chicago Connected Subrecipient Monitoring Federal Agency: United States Department of the Treasury Federal Program: Chicago Connected ? Coronavirus Relief Fund Assistance Listing Number: 21.019 Pass-Through Entity: City of Chicago Compliance Requirements: Subrecipient Monitoring Audit Findings: Material Noncompliance, Material Weakness Criteria In accordance with 2 CFR section 200.332 related to requirements for pass-through entities, all passthrough entities must address the following relative to information provided to subrecipients: ? Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes detailed federal award identification information as described in 2 CFR section 200.332(a)(1) ? All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award ? Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports ? A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and ? Appropriate terms and conditions concerning closeout of the subaward. Additionally, 2 CFR section 200.332 requires the following monitoring activities: ? Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include ? Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. ? Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records Condition CFF did not communicate the required information to subrecipients noted in the criteria including the communication of what funding represented federal funding and was subject to the related grant requirements. Additionally, while CFF in conjunction with program partners monitored the activities of the sub-grantees, the extent and results of this monitoring was not formally documented. Finally, CFF did not formally monitor audit results for the sub-grantees. Cause CFF has not historically received federal grant funding. As a result, management was not familiar with certain administrative requirements related to program oversight. Effect or potential effect Without information regarding the federal nature of certain pass-through funding, sub-grantees may broadly fail to comply with applicable federal requirements. Furthermore, this could impact CFF?s ability to properly oversee sub-grantees and take necessary corrective action, if applicable. Questioned cost None Context As part of testing this major program, requests were made to review agreements with sub-grantees and inquiries were made of CFF management relative to important requirements in 2 CFR section 200.332 and corresponding actions taken by CFF. These audit procedures identified that these key activities were not conducted. The entire amount of federal expenditures for the year ($915,830) were passed through to subrecipients. This finding is applicable for each subrecipient relationship. Identification as a repeat finding This is not a repeat finding. Recommendation We recommend that in the future CFF take the necessary steps to adhere to the requirements in 2 CFR section 200.332 relative to the monitoring of subrecipients. View of responsible officials The Chicago Connected initiative was supported by various external partners, including government and philanthropic funders. As the fiscal sponsor, the Children First Fund executed service agreements with each participating community-based organization (CBO), that noted the amount they were awarded. As deliverables were met, CFF made payments based on when the funds came in since they were not designated to a particular CBO by funder. As a result, CFF did not notify CBOs which payments came from federal vs philanthropic funding. Understanding that this is required when it comes to distributing federal funds to subrecipients, CFF will ensure that it's internal controls are updated to include this moving forward.